Old Mutual global equities head Ian Heslop has cautioned against managers pinning their hopes to interest rate predictions, as he suggests that the value investing style could still play second fiddle to growth for some time to come.
In an interview with the Telegraph, Heslop says that investors trying to forecast metrics like interest rates, growth and oil prices can suffer the “Achilles’ heel” of that data, as how those changes will impact particular assets is often uncertain.
While he cautions against having too strong a focus on particular stocks, sectors or geographies, he says the theme of looking for quality stocks while volatility is on the rise will be his priority.
He says: “’Quality’ stocks have overperformed for an extended period and value stocks have underperformed, but it’s not usual to have such consistency from one style.”
“The market is very different from how it was in 2017. Last year, we had low volatility and markets were generally rising, but even then more ‘defensive’ stocks were being bought. Risk appetite is continuing to fall and volatility is going up.
“So we now place less importance on whether a stock is cheap or expensive: we are looking for quality. For example, in a stable market when everyone is making money, people don’t care whether management is good, bad or indifferent. When markets become unstable, as they have over the past 12 months, it becomes more relevant.”
It was announced that Heslop would take over veteran manager Josh Crabb’s $179.7m (£125.5m) Old Mutual Pacific Equity and the $420.7m Old Mutual Asian Equity Income funds as Crabb’s Asia team were due to leave the firm in April.